The 37th GST Council meeting was held on September 20, 2019, under the chairmanship of Union Finance Minister of India, Smt. Nirmala Sitharaman in Goa. The council meeting concluded bearing good news for all the taxpayers.
The highlights of the 37th GST Council Meeting are as follows:
Optional Annual Returns [FY 2017-18 and FY 2018-19]
As per the 37th GST Council, Annual Return form (GSTR 9) has been made optional for taxpayers with an annual turnover below Rs 2 crores. Similarly, Annual Return for Composite Dealers (GSTR 9A) has been completely waived off for the given fiscal years. However, taxpayers with an annual turnover Rs 2 Crore and above will still be required to file their annual returns, along with GST Audit in form GSTR 9C.
A committee of officers shall be constituted to examine and simplify annual GST return form.
GST Rate Revision
The GST Council has also revised the rates applicable on the following goods and services:
- Plates and cups made of flowers, leaves and bark: Nil (Previously 5%)
- Caffeinated Beverages: 28%+12% cess (Previously 18%)
- Supplies to Railways: 12% (Previously 5%)
- Outdoor Catering (without ITC): 5% (Previously 18%)
- Woven/ Non-woven polyethylene bags: 12% (Previously 18%)
- Job work for Diamonds: 1.5% (Previously 5%)
- Supply of Machine Job: 12%(Previously 18%)
- Marine fuel: 5% (Previously 18%)
- Almond Milk: 18%
- Slide Fasteners: 12% (Previously 18%)
- Wet Grinders (Stone as Grinder): 5% (Previously 12%)
- Dried Tamarind: Nil (Previously 5%)
- Semi-Precious stones (Cut and Polished): 0.25% (Previously 3%)
Compensation Cess on Automobiles
The 37th GST Council has reduced the GST compensation cess on the motor vehicles with a capacity of 10-13 people. The automobile manufacturers and dealers will now be required to charge as follows:
- Cess on Petrol Motor Vehicle(10-13 seater): 1% (From the previous 15%)
- Cess on Diesel Motor Vehicle(10-13 seater): 3% (From the previous 15%)
GST rate cuts on Hotel Tariffs
The following GST rate cuts on hotel tariffs have been decided upon by the GST council
- Room tariff Rs 7500 and above: 18% (Previously 28%)
- Room tariff between Rs. 1000 to Rs. 7500: 12% (Previously 18%)
- Room tariff up to Rs. 1000: Nil
Simplified GST Returns
The New GST Return filing system under simplified GST regime was supposed to be implemented in a phase based manner from October 2019, will now be introduced with the upcoming financial year i.e. from April 2020. Thus, taxpayers will be required to continue filing their GSTR 1 and GSTR 3B until March 2020.
Furthermore, in order to increase compliance of filing of GSTR 1 (outward supplies) a proposed restriction shall be applicable on availing ITC by entities who do not file GSTR 1.
Changes in Refund Policies
The GST Council has recommended the following changes in terms of refunds under GST:
- In case of Nil return is already filed, the eligibility to file refund application in Form GST RFD – 01A for a period and category where NIL refund application is filed shall be notified. Similarly, the refund claim procedure against favourable order in appeal or other forum shall soon be notified.
- Aadhaar card has been made mandatory for GST registration and the possibilities are being examined for making Aadhaar registration mandatory to refund claims.
- The Integrated Refund system for disbursement of refund by single authority to be introduced from 24th September 2019
Services added under RCM
The following services have been brought under Reverse Charge Mechanism
- RCM on payment of GST payment on securities lending service under RCM at the merit rate of 18%. Also clarified that GST on securities lending service for period prior to RCM period shall be paid on forward charge basis. IGST shall be payable on supply of these services and in cases where CGST/SGST/UTGST have been paid, such taxpayers will not be required to pay tax again
- RCM to Suppliers paying GST @ 5% on renting of vehicles, from registered person other than body corporate (LLP, proprietorship) when services provided to body corporate entities.
The following goods and services have been exempted from GST as per the 37th GST Council meeting:
- The exemption on specified imported defence goods that have been not been manufactured indigenously has been extended to 2024
- Platinum imported for the purpose of re-export as jewellery shall be exempted from GST.
- The supply of goods and services to FIFA and other specified persons have also been exempted for the U17 Women’s World Cup, which is to take place in India.
- Supply to the Food and Agriculture Organisation (FAO) for specified projects in India.
- The States will continue receiving compensation under GST up to 2025
- The issue of setting a uniform rate on lottery tickets has been referred back to the Group of Ministers (GoM) that are reviewing the rates on lottery tickets.
- The Circular No 105/24/2019-GST dated 28.06.2019 issued for Post Sales Discounts is being rescinded ab-initio
- The last date to fill appeal with Appellate tribunal has been extended as tribunal is yet to be functional.
- Clarification regarding supply ITeS services (in supersession of Circular No. 107/26/2019-GST dated 18.07.2019) being made on own account or as intermediary
- Reasonable restrictions on passing of credit by risky taxpayers including risky new taxpayers has also been taken into consideration.
Agenda for 37th GST Council Meeting
Prior to the meeting on 20th September 2019, the follows was being expected from the 37th GST Council Meeting:
1.Reduction of GST Rates in Auto Sector
The automobile industry has requested a GST rate cut from 28% to 18%, in a prospect of attracting customers in the upcoming festive season. While the government is keen on the same, this may result in huge revenue loss.
The Fitment Committee, a panel of officials of the GST council that examined the implications of a GST rate cut suggests that reduction in tax rate will bring down collections by over Rs 20,000 crore. Quoting one of the senior finance ministries, “if it (GST rate cut) is done for one sector, it can open floodgates. We should not forget the revenue situation.” This probably lowers the chances of bringing GST rate related discussions in the upcoming council meeting.
2. Review return filings
The 37th GST Council Meet is expected to review the current and new return filings as well as focus on the phased introduction of new return forms. Furthermore, the council may also review penal proviso against non-filers, including debarring of Eway Bill issuance.
As per the statistics so far, on an average 20 per cent assessees do not file the return within the given due date which affects overall revenue collection.
3. ITC treatment in the healthcare sector
Owing to the absence of input tax credit (ITC), several hospitals have claimed an approximate 8% drop in their yearly profit margin. As these hospitals (excluding cosmetic surgeries and hair transplants) are exempt from GST charges, they cannot claim ITC, which eventually leads to an increase in the cost of inward supplies. Thus, these healthcare units have requested the finance ministry for an output GST of 5% on such taxable services without ITC. GST council might consider the same for a discussion in the upcoming GST council meet.
4. Review present GST Revenue Position
Although the finance ministry has scaled down the GST collection target from Rs 7.61 lakh crores to 6.63 lakh crores, (likewise, with the State GST combined, i.e. from 1.14 lakh crores to 1 lakh crores, based on the interim budget). The ministry aims to increase revenue collection and avoid a fiscal deficit. Thus, the Council is likely to consider the same for the discussion as well as initiate additional steps to bring down tax evasion.
5. Single Authority Mechanism for Export Refunds
The upcoming GST meet is likely to approve a single authority mechanism for exporters to sanction and process GST refunds for exporters in a faster and simpler manner. As of now, state and central officers separately settle SGST and CGST refund claims, making the procedure complex, which has further led to piling of Refunds of around Rs 10,000 crore.
6. Uniform GST rates for Lottery Tickets
The lottery industry has been requesting for a uniform GST rate of 12 per cent and removal of tax on the prize money as the duel rate (12% for lotteries sold within state and 28% for the ones sold outside) is hampering the growth of the business. The Council in its July meeting had also decided to seek legal opinion from the Attorney General on the issue and the same might be considered for a discussion in the upcoming GST Council meeting.
7. Revised Rates for Biscuits
Biscuit Manufacturers Welfare Association (BMWA) has written to Finance Minister Nirmala Sitharaman seeking revised Goods & Services Tax (GST) of 5% for entry-level biscuits priced up to Rs 100 per kg.over the concerns of steady decline of affordable biscuit consumption over the past few months. Biscuits priced below Rs 100 per kg were exempted from excise before GST era. Currently, biscuits are levied with 18% GST.
Sectors such as hotels, cement and textiles are also hoping for some GST relief.
The GST Council is scheduled to meet on 20 September to consider tax revisions on various categories including biscuits and the auto sector.
8. Separate deadline for small and large taxpayers
The upcoming goods and services (GST) council is likely to pitch in for separate deadlines for large and small taxpayers under the new simplified return process.
GST Council will finalise on Centre’s proposal to have two deadlines for new simplified returns as follows:
- Last date to file RET1 for Large tax payers – 20th of next month
- Last date to file RET1 for small taxpayers – 25th of next month
- Last date for filing of Anx 1 for large taxpayers – 10th of next month
- Last date for filing of Anx 1 for small taxpayers – 13th of next month
- Last date for filing of Anx 2 – for both large and small taxpayers – 17th of next month
9. No GSTR 9 filing for minimum threshold
Council is likely to waive off the mandatory requirement to file GST annual returns – GSTR9, GSTR9A and GSTR9C, for the financial year 2017-18, 2018-19 for taxpayers below annual turnover of Rs 2 crore.
10. Special Composition Scheme
The council may consider to introduce a special composition scheme and increase the GST rate from the current rate of 5 percent to 12 percent for taxpayers supplying brick kilns, sand mining activities and stone crushers.
- The Fitment Committee does not recommend any reduction in the present GST rate for Biscuits and Auto-sector, on account of huge revenue implications. In its 286-page recommendation, the committee suggested the slowdown can be attributed to various factors like liquidity crunch, crisis affecting NBFC, axle load increase, abolition of check-posts after introduction of GST, cyclical nature of the industry, and structural changes like BS-IV to BS-VI.
- The luxury hotel category (charging Rs 7,500 per night approx.) inviting more than 28 per cent GST could witness some relief on September 20.The Council may reduce the GST rates applicable to luxury hotels-with rates up to Rs 10,000-Rs 12,000/night-to 18 per cent.
- The outdoor catering industry, currently charged 18 per cent GST can also expect some relief.
- The Matchstick manufacturers, too, could expect relief.
To read our coverage on the previous Council Meet decisions, you may refer here:
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